Ulster Bank customer gets loan interest written off

A businessman from the west of Ireland, who did not want to be identified because he is appealing the decision, took his case against Ulster Bank on foot of the massive fines imposed on Royal Bank of Scotland (RBS) following its conviction for manipulating the euribor [euro interbank offered rate] index.
Ulster Bank is a wholly owned subsidiary of RBS. The basis of this case was a letter sent by Ulster Bank to the businessman in January 2006 informing him that his loan with the bank had been switched from the PRIME index to euribor index. The index will determine the cost of funding for the bank in any loan agreement.
He argued in court that according to the laws covering bank loans, the terms of a contract cannot be changed unilaterally and that neither party has the right to manipulate the underlying index from which the loan is priced. Last year the European Commission fined a number of banks, including RBS £1.7bn for manipulating the euribor index between September 2005 and May 2008.
In the case which was heard last month, Ulster Bank was ordered to write off the interest on this loan. However, the businessman is appealing the decision on the basis that he wants the original loan contract declared null and void.
A businesswoman, Clare Leonard, is taking a case against Ulster Bank on the same grounds. She is suing the bank for what she claims is a “conflict of interest and breach of contract” on the basis even though the interest rate on her loan remained fixed, Ulster Bank/RBS was increasing its profit margin because it was manipulating the euribor index to artificially low levels. She also wants her original loan contract to be declared null and void.
Ms Leonard says that she has been in contact with roughly 50 current and former Ulster Bank customers who are already in legal disputes with the bank over loans in arrears but whose contracts were changed from Prime to euribor. They also plan to challenge Ulster Bank on these grounds, she says.
Ms Leonard estimates that overall thousands of Ulster Bank customers could be affected by the court ruling last month. However, a source close to Ulster Bank says the number of customers that were switched to the euribor index is very small.
Ulster Bank declined to comment.